Hulamin purchases significant portion of BHP Billiton’s SA casthouse

Hulamin’s share is 40 percent and the remaining 60 percent will be held by black investment group Bingelela Capital.

South African aluminium products manufacturer Hulamin has announced that it is part of a group which had signed a deal to buy a casthouse from BHP Billiton.

BHP, the world’s biggest mining company, has sold its Richards Bay, Bayside casthouse to Isizinda Aluminium, which is 40 percent owned by Hulamin and 60 percent held by black investment group Bingelela Capital. The deal value was not disclosed.

The diversified major, which is in the process of demerging its South African aluminium, manganese and coal assets into a separate new company (Newco) that will be listed in Australia, South Africa and Britain, said that it had reached a definitive agreement to sell its Bayside value-added-product casthouse in Richards Bay, KwaZulu-Natal, to Isizinda Aluminium, a majority owned, broad-based black economic-empowerment consortium.

BHP will supply the casthouse with 96 000 tons of liquid metal from its nearby smelter for R10 billion over the next five years, the company said.

The transaction also takes in the unprecedented supply of metal in liquid form, 17 hectares of land for future expansion into an aluminium downstream hub, equipment and the buildings associated with the casthouse, which is guaranteed 96 000 tons of liquid aluminium a year to be transported from Newco’s Hillside smelter to the nearby Bayside casthouse for the next five years.

“The sale of the casthouse reflects our vision to grow the downstream industry in South Africa and to contribute to the transformation of the economy in Richards Bay,” said BHP’s chief executive elect Graham Kerr.

Kerr declined to say if any other South African assets would be sold-off.

BHP closed its Bayside smelter operation in June 2014 after “significant financial pressure” but the casthouse operations continued to operate with aluminium from the neighbouring Hillside smelter.

South Africa’s government wants local companies to play a bigger role in developing its natural resources.

The agreement “will secure our rolling-slab supply from Bayside for the next five years,” Hulamin said.

The transaction, which must still secure a regulatory nod, is expected to be completed before June.

Expansion of the casthouse beyond its current capacity is being studied to create a larger downstream aluminium industry within South Africa. If progressed, such projects are expected to come into fruition over the next few years and would be beneficial for the downstream aluminium industry and the Richards Bay economy.

Hulamin, which is headquartered in Pietermaritzburg, KwaZulu Natal is currently the casthouse’s biggest customer.

Newco, of which Hillside forms part, will have 12 assets in five countries and 24 000 employees and contractors. Besides BHP Billiton’s integrated aluminium business in South Africa, Mozambique and Australia, Newco also takes in manganese and energy coal in South Africa, metallurgical coal in Australia, nickel in Colombia and silver in Australia.